Professional Documents
Culture Documents
PROJECT REPORT ON
“A STUDY ON FINANCIAL INSTRUMENTS”
(TRADITIONAL APPROACH)
SUBMITTED TO
MAHAKAL INSTITUTE OF MANAGEMENT, UJJAIN
TOWARDS
PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF DEGREE OF MASTER OF BUSI
NESS ADMINISTRATION (MBA)
OF
VIKRAM UNIVERSITY, UJJAIN (M.P.)
June-July 2010
DECLARATION
I, the undersigned, Rini Jacob hereby declare that the present, summer project t
itle “A Study on Financial instrument” (traditional approach) is based on my origina
l work and my indebtedness to other works, publication, has been duly acknowledg
ed at relevant places.
ACKNOWLEDGEMENT
I take this opportunity to express my deep sense of gratitude towards all the pe
rsons who helped me through their guidance and cooperation to complete the proje
ct successfully. It is great privilege and honor to have an opportunity of doing
project at Karvy stock broking limited Ujjain.
First of all I would like to give my sincere thanks to Mr. Bunty Kumar (branch m
anager) for granting me permission to do my training on FINANCIAL INSTRUMENTS (T
RADITIONAL APPROACH). I m very grateful to my project guide for his generous gui
dance and giving full co-operation to me despite their hectic schedule. .
I express my sincere gratitude to all persons who gave me guidance and help for
conducting this study.
CONTENTS
A. General training:
Introduction
History of the organisation
Mission and vision of Karvy
Organisational structure
Karvy group
Services offered by Karvy group
Achievements of Karvy group
SWOT analysis
B. Special project undertaken:
Chapter 1: introduction
Chapter 2: Research methodology
Introduction to the project
a) The study and objectives
b) Sample
c) Tools
• Data collection
• Data analysis
INTRODUCTION
Karvy is a premier integrated financial services provider and ranked among the t
op five in the country in all its business segments. It services over 16 million
individual investors in various capacities and provides investor services to ov
er 300 corporate, comprising who is who of Corporate India.
It is a member of all three:-
Karvy utilized its experience and superlative expertise to capitalize on its str
engths and better its services, innovate and provide new ones. It’s diversified in
the process and thus evolved as India’s premier integrated financial services ent
erprise.
Karvy has been a customer centric company since its inception. It offers a singl
e platform servicing multiple financial instruments in its bid to offer complete
financial solution to the varying needs of both corporate and retail investors,
where and extensive range of services are provided with great volume- managemen
t capability.
Karvy covers the entire spectrum of financial services such as stock broking, de
pository, participants, distribution of financial product- mutual funds, bonds,
fixed deposit, equities, insurance broking, commodities broking, personal financ
e advisory services, merchant banking & corporate finance, placement of equity,
IPOs, among others.
HISTORY OF ORGANIZATION
Karvy was started by a group of five chartered accountants in 1979. The partners
decided to offer, other than the audit services, value added services like corp
orate advisory services to their clients. The first firm in the group, Karvy Con
sultants Limited was incorporated on 23rd July, 1983. In a very short period, it
became the largest Registrar and Transfer Agent in India. This business was spu
n off to form a separate joint venture with Computershare of Australia, in 2005.
Karvy’s foray into stock broking began with marketing IPOs, in 1993. Within a few
years, Karvy began topping the IPO procurement league tables and it has consist
ently maintained its position among the top 5. Karvy was among the first few mem
bers of National Stock Exchange, in 1994 and became a member of The Stock Exchan
ge, Mumbai in 2001. Dematerialization of shares gathered pace in mid-90s and Kar
vy was in the forefront educating investors on the advantages of dematerializing
their shares. Today Karvy is among the top 5 Depositary Participant in India.
While the registry business is a 50:50 Joint Venture with Computershare of Austr
alia, we have equity participation by ICICI Ventures Limited and Barings Asia Li
mited, in Karvy Stock Broking Limited. For a snapshot of our organization struct
ure, please click here.
Karvy has always believed in adding value to services it offers to clients. A to
p-notch research team based in Mumbai and Hyderabad supports its employees to ad
vise clients on their investment needs. With the information overload today, Kar
vy’s team of analysts help investors make the right calls, be it equities, mf, ins
urance. On a typical working day Karvy:
• Has more than 25,000 investors visiting our 575 offices.
• Publishes / broadcasts at least 50 buy / sell calls
• Attends to 10,000+ telephone calls
• Mails 25,000 envelopes, containing Annual Reports, dividend cheques / advises, a
llotment / refund advises
• Executes 150,000+ trades on NSE / BSE
• Executes 50,000 debit / credit in the depositary accounts
MISSION AND VISION OF KARVY
MISSION STATEMENT OF KARVY:
An organization exists to accomplish something or achieve something. The mission
statement indicates what an organization wants to achieve .Karvy’s mission statem
ent is “TO BRING INDUSTRY, FINANCE AND PEOPLE TOGETHER”
Karvy act as an intermediary between industry and people. It work as an investme
nt advisor and helps people to invest their money ,same way Karvy helps industry
in achieving finance from people by issuing shares,debentures,bonds,mutual fund
s, fixed deposits.
VISION OF KARVY:
Company’s vision is crystal clear and mind frame very directed.”To be pioneering fin
ancial services company and continue to grow at a healthy pace, year after year,
decade after decade. Company foray into IT- enabled services and internet busin
ess has provided an opportunity to explore new frontiers and business solution;
to build a corporate that sets benchmark for others to follow.
ORGANIZATIONAL STRUCTURE
KARVY GROUP
Karvy has travelled the success route, towards building a reputation as an integ
rated financial service provider, offering a wide spectrum of services for over
20 years.
Karvy, a name long committed to service at its best. A fame acquired through the
range of corporate and retail services including merchant banking, mutual funds
, fixed income, equity investments, insurance, commodities to name a few. Our v
alues and vision of attaining total competence in our servicing has served as a
building block for creating a large financial enterprise.
The Karvy group of companies are:
Karvy stock broking ltd.:
A member of National Stock Exchange (NSE), Bombay Stock Exchange (BSE), and Hy
derabad Stock Exchange (HSE) offers a comprehensive range of services in the sto
ck market through the benefits of in-depth research on crucial market dynamics,
done by qualified team of experts. The company offers solutions that encompass a
wide spectrum of financial services/products.
1. Karvy Comtrade ltd.:
The company provides investment, advisory and brokerage services in Indian Commo
dities Markets. And most importantly, we offer a wide reach through our branch n
etwork of over 530 branches located across
390 cities.
2. Karvy insurance broking ltd.:
The company provides life and non-life insurance products to retail individuals,
high net worth clients and corporate. A major step towards being the most compr
ehensive personal finance advisor.
Registered with SEBI as a Category I Merchant Banker and ranked among the top 10
merchant bankers in the country, the company has built a reputation as a profes
sional advisor in structuring IPO’s take over assignments and buy back exercises.
4. Karvy Computershare private ltd:
b) Bonds :
Karvy deals with bonds from RBI saving bonds, NHB and REC.
c) IPO:
Karvy also provides services related to IPO (Initial public offer).Recently Karv
y released the IPO of SKS Microfinance.
4) Investment advisory services:
Karvy also provides investment advisory services.i.e, portfolio management servi
ces to high net worth individuals and corporate. It guides its investors to inve
st in right kind of funds for better return to its investors.
5) Merchant banking:
Merchant banking is a financial intermediation that matches entities that need c
apital and those that have capital. Hence they facilitate the flow of capital in
the market.
Karvy enjoys SEBI category I for merchant banking. Karvy offers the full spectru
m of merchant banking service beginning from identity the best time for an issue
to final stage of marketing.
6) Insurance:
Karvy is also a dealer of many private life insurance companies. At Ujjain branc
h, it is associated with the dealing of following companies like Tata AIG, Max B
UPA and the like.
7) Mutual fund services:
Karvy provides services to nearly 80% of the asset management services (AMC) acr
oss an extensive network of service centres with asset under service in excess o
f Rs.10, 000 crores.
8) Income tax enabled services:
Karvy provide income tax enabled services. It works as a TIN Facilitation centre
and provides the following services:
• Distribution of PAN Cards (Permanent account number).
• Distribution of TAN Cards ()
ACHIEVEMENTS OF KARVY
• Largest mobilizer of funds as per PRIME DATABASE.
• First ISO-9002 certified registrar in India.
• A category –I Merchant banking.
• A category – I Registrar to public issues.
• Ranked as “The most admired registrar” by MARG.
• Handled the largest ever public issue- IDBI.
• Handled over 500 public issues as registrar.
• Handling the Reliance accounts which accounts for nearly 10 million account hold
ers.
• First depository participant from Andhra Pradesh.
SWOT ANALYSIS
Strength:
• No.1 registrar and transfer agent of companies
• Strong communication network
• Employees are highly empowered.
Weakness:
• High employee turnover.
Opportunities
• Need to explore the rural and semi urban areas.
Threats:
• Increasing number of local players.
INTRODUCTION
FINANCIAL INSTRUMENTS:
In simple terms Financial Instrument is either cash; evidence of an ownership in
an entity or a contractual right to receive or deliver, cash or another financi
al instruments.
Financial Instruments are legal documents that embody monetary value. There are
a number of different types of documents that are properly identified as financi
al instruments. In today s financial marketplace, financial instruments can be
classified generally as equity based, representing ownership of the asset, or de
bt based, representing a loan made by an investor to the owner of the asset. For
eign exchange instruments comprise a third, unique type of instrument
They are broadly categorized under two heads. They are as follow:
TYPES OF FINANCIAL INSTRUMENTS
Financial instruments are broadly categorised under two heads they are as follow
:
• Cash instruments:
This type of financial instrument is simply those documents that are recognized
as cash that can be utilized for various transactions.
Currency is the most easily identified of all cash instruments, although such do
cuments as checks or funds transfers from bank accounts would also be understood
to be a financial instrument of this type.
• Derivative instruments:
In broad terms, a derivative instrument is some type of contract that has value
based on the current status of the underlying assets.
This classification would include such instruments as future options, and swaps.
Some analysts also prefer to include stocks, bonds, and currency future within
this category.
INSURANCE
Insurance, in law and economics, is a form of risk management primarily used to
hedge against the risk of a contingent loss. Insurance is defined as the equitab
le transfer of the risk of a potential loss, from one entity to another, in exch
ange for a premium.
Insurer, in economics, is the company that sells the insurance.
Insurance rate is a factor used to determine the amount, called the premium, to
be charged for a certain amount of insurance coverage. Risk management, the prac
tice of appraising and controlling risk, has evolved as a discrete field of stud
y and practice.
SUM ASSURED:
It is the amount of money an insurance policy guarantees to pay before any bonus
es are added.
Factors included in the calculation of sum assured are:
• Date of birth.
• Gender.
• Duration.
• Health conditions.
• Job profile.
LIFE INSURANCE:
All policies are not the same. Some give coverage for your lifetime and others c
over you for a specific number of years.
Following are the different types of life insurances:
• Whole life
• Term policy
• Money back
• Endowment
• Pension plan
• ULIP
GENERAL INSURANCE:
General insurance typically comprises any insurance that is not determined to be
life insurance. It is called property and casualty (P&C) insurance in the U.S.
General insurance policies, including automobile, accidents and homeowner’s polici
es, provide payments depending on the loss from a particular financial event.
ABOUT PRODUCT:
TERMS:
Term mean the time period of policy and Maha life gold of Tata AIG for year.
1* 5* 6* 10* 11*
15*
*= YEARS
SUM ASSURED: 1 lack – no limit
AGE CRITERIA: 0 to 60
PREMIUM RATES (Rs.1, 00,000.)
FOR INDICATED SUM ASSURED
ISSUE
AGE ANNUAL SEMI
ANNUAL
0-35 9150 4667
36-45 9200 4692
46-50 9250 4718
51-55 9300 4743
56 9428 4808
57 9508 4849
58 9603 4898
59 9699 4964
60 9836 5016
1 2 3 4
1ST YEAR – 5TH YEAR =
1ST PREMIUM (for 36-39) = 9,200rs
Total premium in 4year = 9,200*4
Total premium in 4 year = 36,800
6 7 8 9 10
6th year - 10th year =
6th year premium = 9,200
Total premium in 5 year = 9,200*6
Total premium in 5 year = 55,200
After 5 year there is a provision of 3% flexible per annum dividend on sum assur
ed.
Calculation:
= 1,00,000*3/100.
= 3,00,000/100.
= 3,000 PER YEA
TOTAL INTREST IN 6 YEAR=
5TH* 6TH* 7TH* 8TH*
9TH* 10th * 15
* = YEAR
TOTAL INTREST IN 5 YEAR= 18,000
10th year - 15th year =
11th* 12th* 13th* 14th* 15th*
* = YEAR
AGE
TOTAL
INVESTMENT
TOTAL
INCOME
35-39 46,000 -
40-45 46,000 18,000
46-50 46,000 55,000
50-80 - 4,50,000
AT THE TIME
OF DEATH 1,00,000
TOTAL
1,38,000
6,30,000
The benefit of this policy that policy holder only have to pay the premium only
for 15 year and he receive benefit for long period of time.
Nomination / Transferability:
• Nomination facility is available.
• Certificates can be transferred from one post office to any other post office.
• Transfer from one person to another person permissible in certain conditions.
Denomination :
• Certificates are available in denominations (face value) of Rs. 100, Rs.500, Rs.
1000, Rs. 5000 & Rs. 10,000.
Interest/maturity value :
• Interest is available on this scheme @ 8%, compounded half-yearly
• Interest accrued on the certificates every year is liable to income tax but deem
ed to have been reinvested.
Income Tax relief :
• Income Tax rebate is available on the amount invested and interest accruing ever
y
year under Section 88 of Income tax Act, as amended from time to time. [under Se
c 80C]
• Income tax relief is also available on the interest earned as per limits fixed v
ied section 80L of Income Tax, as amended from time to time.
BONDS
Meaning of Bonds:
A Bond is a debt security. When you purchase a bond, you are lending money to a
government, municipality, corporation, federal agency or other entity known as “is
suer”.
In return for that money ,the issuer provides you with a bond in which it promis
es to pay a specified rate of interest during the life of the bond and to repay
the face value of the bond (the principal)when it matures or comes due.
Bonds provide the borrower with external funds to finance long-term investments
, or, in the case of government bonds, to finance current expenditure. Certifica
tes of deposit (CDs) or commercial paper are considered to be money market instr
uments and not bonds. Bonds must be repaid at fixed intervals over a period of t
ime.
Features of Bonds:
Nominal, principal or face amount:
The principal is the amount at which issuer pays interest and which, most common
ly, has to be repaid at the end of the term.
Issue price:
Issue price is the price at which investors buy the bonds when they are first is
sued, which will typically be approximately equal to the nominal amount.
Maturity date:
The date on which the issuer has to repay the nominal amount. As long as all pay
ments have been made, the issuer has no more obligations to the bond holders aft
er the maturity date.
• Short term (bills): maturities up to one year.
• Medium term (notes): maturities between one and ten years.
• Long term (bonds): maturities greater than ten years.
coupon :
The interest rate at which the issuer pays to the bond holders. Usually this rat
e is fixed throughout the life of the bond.
Coupon dates:
The dates on which the issuer pays the coupon to the bond holders. In the U.S. a
nd also in the U.K. and Europe, most bonds are semi-annual, which means that the
y pay a coupon every six months.
FIXED DEPOSITS
WHAT IS A FIXED DEPOSIT?
A fixed deposit is meant for those investors who want to deposit a lump sum of m
oney for a fixed period; say for a minimum period of 15 days to five years and a
bove, thereby earning a higher rate of interest in return. Investor gets a lump
sum (principal + interest) at the maturity of the deposit.
Bank fixed deposits are one of the most common savings scheme open to an average
investor. Fixed deposits also give a higher rate of interest than a savings ban
k account. The facilities vary from bank to bank. Some of the facilities offere
d by banks are overdraft (loan) facility on the amount deposited, premature with
drawal before maturity period (which involves a loss of interest) etc. Bank depo
sits are fairly safer because banks are subject to control of the Reserve Bank o
f India.
FEATRURES OF FIXED DEPOSITS:
Bank deposits are fairly safe because banks are subject to control of the Reserv
e Bank of India (RBI) with regard to several policy and operational parameters.
The banks are free to offer varying interests in fixed deposits of different mat
urities. Interest is compounded once a quarter, leading to a somewhat higher eff
ective rate.
Minimum deposits:
The minimum deposit amount varies with each bank. It can range from as low as Rs
. 100 to an unlimited amount with some banks.
How to apply?
One can get a bank FD at any bank, be it nationalised, private, or foreign. You
have to open a FD account with the bank, and make the deposit. However, some ban
ks insist that you maintain a saving account.
Returns:
The rate of interest for Bank Fixed Deposits varies between 4 and 11 per cent, d
epending on the maturity period (duration) of the FD and the amount invested
B.The Sample:
In the project “Financial instruments (traditional approach), I have used “Pr
obability Sampling”. Probability sampling is also known as random sampling.
Sample size: 70 respondents
Sampling period: June 22, 2010 to august 3, 2010.
Sample place: Ujjain city.
As keeping in mind the objective of the study the sample size and sampling techn
ique was selected. Under this sampling technique, it was possible to include var
ious groups of investors within the limited span of time. Secondly it gave me am
ple opportunity to identify the potential customers for the company.
C. The tools:
1. For data collection
The task of data collection begins after a research problem has been defined pro
perly. I have used “Survey method” to collect the data.
I have used “structured questionnaire” for gathering information through contacting
respondent personally. Multiple choice questions are asked in the questionnaire
for data collection.
2. Data analysis
Data analysis is based on the data collected by way of questionnaire.
LIMITATIONS
The sample extent for research is only Ujjain city.
Due to limitation of time and cost constraint a sample size of 70 respondents we
re chosen.
Some of the respondents denied furnishing any information.
Q.1.Which investment option you prefer the most?
Data interpretation:
Majority of respondents (43%) prefer insurance as a better option for investment
. While 29% prefer share market as their investment option.11% go for fixed depo
sits, 9%bonds, 6% national saving certificates and 3%respodents go for Kisan Vik
as Patra.
Data interpretation:
The basic purpose of an investor is saving. About 43% of the respondents agree t
o this fact. While 29% of respondents go for tax benefits.21% respondents for pr
ofit and 7% for risk cover.
Data interpretation:
In Ujjain, 36% of the respondents have a Demat account. 64% of the respondents d
on’t have a Demat account.
Data interpretation:
50% of the respondents had their Demat account in Karvy stock broking ltd.29% in
Arihant capital and 14% respondents in indo-Thai securities. While the remainin
g 7% in share khan.
Data interpretation:
About 43% of the respondents said that they were charged 0.03ps (intraday) and 0
.30ps (delivery).while 57% of the respondents were charged 0.05ps (intraday) and
0.50ps (delivery).
Q.7.Do you know about the annual maintenance charges of your broking firm?
Data interpretation:
It was found that majority of the investors are not aware of the annual maintena
nce charges (64% of respondents).36% of the respondents are aware of their annua
l maintenance charges.
Data interpretation:
79% of the respondents are satisfied by the services rendered by Karvy.21% of th
e respondents are not satisfied by Karvy.
Data interpretation:
29%of the respondents prefer to invest in private sector or company. Remaining 7
1% prefer to invest in public sector or company.
Q.10.What is the most important thing that you keep in mind while investing in s
hare market?
Data interpretation:
57% of the respondents keep in mind the risk associated with the investment. Whi
le 43% respondents keep in mind the returns which they will get after investment
.
Data interpretation:
Only 7% of the respondents have medical claim policy. Majority of the respondent
s i.e. 93% of the respondents don’t have medical claim policy.
Data interpretation:
In Ujjain 86% of the respondents have LIC insurance plans i.e.LIC is the major p
layer in the insurance sector.9% of the respondents have insurance plans of Baja
j Allianz and 6% respondents have policy of other companies.
Data interpretation:
About 79% of the respondents know about Karvy.21% of respondents don’t know about
Karvy.
There is a high potential market for Karvy stock broking ltd. in Ujjain, but thi
s market needs to be explored as investors (15% of respondents) are unaware of K
arvy stock broking ltd.
In Ujjain, investors have inadequate knowledge about financial instruments, so t
he company needs proper marketing of all their services advertising, distributio
n of pamphlet, arranging seminars etc.
Last but not the least, the point which Karvy should keep in mind is to get invo
lved in aggressive marketing. It has optimum resources and these resources need
to be channelized in a more efficient manner.
QUESTIONNAIRE
Name:
Address:
Age:
Contact no.
Q1.Which investment option you prefer?
Ans.Insurance Share market
Fixed deposits Bonds
National saving certificate Kisan Vikas Patra
DECLARATION
I, the undersigned, Rini Jacob hereby declare that the present, summer project t
itle “A Study on Financial instrument” (traditional approach) is based on my origina
l work and my indebtedness to other works, publication, has been duly acknowledg
ed at relevant places.
ACKNOWLEDGEMENT
I take this opportunity to express my deep sense of gratitude towards all the pe
rsons who helped me through their guidance and cooperation to complete the proje
ct successfully. It is great privilege and honor to have an opportunity of doing
project at Karvy stock broking limited Ujjain.
First of all I would like to give my sincere thanks to Mr. Bunty Kumar (branch m
anager) for granting me permission to do my training on FINANCIAL INSTRUMENTS (T
RADITIONAL APPROACH). I m very grateful to my project guide for his generous gui
dance and giving full co-operation to me despite their hectic schedule. .
I express my sincere gratitude to all persons who gave me guidance and help for
conducting this study.
CONTENTS
A. General training:
Introduction
History of the organisation
Mission and vision of Karvy
Organisational structure
Karvy group
Services offered by Karvy group
Achievements of Karvy group
SWOT analysis
B. Special project undertaken:
Chapter 1: introduction
Chapter 2: Research methodology
Introduction to the project
a) The study and objectives
b) Sample
c) Tools
• Data collection
• Data analysis
INTRODUCTION
Karvy is a premier integrated financial services provider and ranked among the t
op five in the country in all its business segments. It services over 16 million
individual investors in various capacities and provides investor services to ov
er 300 corporate, comprising who is who of Corporate India.
It is a member of all three:-
Karvy utilized its experience and superlative expertise to capitalize on its str
engths and better its services, innovate and provide new ones. It’s diversified in
the process and thus evolved as India’s premier integrated financial services ent
erprise.
Karvy has been a customer centric company since its inception. It offers a singl
e platform servicing multiple financial instruments in its bid to offer complete
financial solution to the varying needs of both corporate and retail investors,
where and extensive range of services are provided with great volume- managemen
t capability.
Karvy covers the entire spectrum of financial services such as stock broking, de
pository, participants, distribution of financial product- mutual funds, bonds,
fixed deposit, equities, insurance broking, commodities broking, personal financ
e advisory services, merchant banking & corporate finance, placement of equity,
IPOs, among others.
HISTORY OF ORGANIZATION
Karvy was started by a group of five chartered accountants in 1979. The partners
decided to offer, other than the audit services, value added services like corp
orate advisory services to their clients. The first firm in the group, Karvy Con
sultants Limited was incorporated on 23rd July, 1983. In a very short period, it
became the largest Registrar and Transfer Agent in India. This business was spu
n off to form a separate joint venture with Computershare of Australia, in 2005.
Karvy’s foray into stock broking began with marketing IPOs, in 1993. Within a few
years, Karvy began topping the IPO procurement league tables and it has consist
ently maintained its position among the top 5. Karvy was among the first few mem
bers of National Stock Exchange, in 1994 and became a member of The Stock Exchan
ge, Mumbai in 2001. Dematerialization of shares gathered pace in mid-90s and Kar
vy was in the forefront educating investors on the advantages of dematerializing
their shares. Today Karvy is among the top 5 Depositary Participant in India.
While the registry business is a 50:50 Joint Venture with Computershare of Austr
alia, we have equity participation by ICICI Ventures Limited and Barings Asia Li
mited, in Karvy Stock Broking Limited. For a snapshot of our organization struct
ure, please click here.
Karvy has always believed in adding value to services it offers to clients. A to
p-notch research team based in Mumbai and Hyderabad supports its employees to ad
vise clients on their investment needs. With the information overload today, Kar
vy’s team of analysts help investors make the right calls, be it equities, mf, ins
urance. On a typical working day Karvy:
• Has more than 25,000 investors visiting our 575 offices.
• Publishes / broadcasts at least 50 buy / sell calls
• Attends to 10,000+ telephone calls
• Mails 25,000 envelopes, containing Annual Reports, dividend cheques / advises, a
llotment / refund advises
• Executes 150,000+ trades on NSE / BSE
• Executes 50,000 debit / credit in the depositary accounts
MISSION AND VISION OF KARVY
MISSION STATEMENT OF KARVY:
An organization exists to accomplish something or achieve something. The mission
statement indicates what an organization wants to achieve .Karvy’s mission statem
ent is “TO BRING INDUSTRY, FINANCE AND PEOPLE TOGETHER”
Karvy act as an intermediary between industry and people. It work as an investme
nt advisor and helps people to invest their money ,same way Karvy helps industry
in achieving finance from people by issuing shares,debentures,bonds,mutual fund
s, fixed deposits.
VISION OF KARVY:
Company’s vision is crystal clear and mind frame very directed.”To be pioneering fin
ancial services company and continue to grow at a healthy pace, year after year,
decade after decade. Company foray into IT- enabled services and internet busin
ess has provided an opportunity to explore new frontiers and business solution;
to build a corporate that sets benchmark for others to follow.
ORGANIZATIONAL STRUCTURE
KARVY GROUP
Karvy has travelled the success route, towards building a reputation as an integ
rated financial service provider, offering a wide spectrum of services for over
20 years.
Karvy, a name long committed to service at its best. A fame acquired through the
range of corporate and retail services including merchant banking, mutual funds
, fixed income, equity investments, insurance, commodities to name a few. Our v
alues and vision of attaining total competence in our servicing has served as a
building block for creating a large financial enterprise.
The Karvy group of companies are:
Karvy stock broking ltd.:
A member of National Stock Exchange (NSE), Bombay Stock Exchange (BSE), and Hy
derabad Stock Exchange (HSE) offers a comprehensive range of services in the sto
ck market through the benefits of in-depth research on crucial market dynamics,
done by qualified team of experts. The company offers solutions that encompass a
wide spectrum of financial services/products.
1. Karvy Comtrade ltd.:
The company provides investment, advisory and brokerage services in Indian Commo
dities Markets. And most importantly, we offer a wide reach through our branch n
etwork of over 530 branches located across
390 cities.
2. Karvy insurance broking ltd.:
The company provides life and non-life insurance products to retail individuals,
high net worth clients and corporate. A major step towards being the most compr
ehensive personal finance advisor.
Registered with SEBI as a Category I Merchant Banker and ranked among the top 10
merchant bankers in the country, the company has built a reputation as a profes
sional advisor in structuring IPO’s take over assignments and buy back exercises.
4. Karvy Computershare private ltd:
b) Bonds :
Karvy deals with bonds from RBI saving bonds, NHB and REC.
c) IPO:
Karvy also provides services related to IPO (Initial public offer).Recently Karv
y released the IPO of SKS Microfinance.
4) Investment advisory services:
Karvy also provides investment advisory services.i.e, portfolio management servi
ces to high net worth individuals and corporate. It guides its investors to inve
st in right kind of funds for better return to its investors.
5) Merchant banking:
Merchant banking is a financial intermediation that matches entities that need c
apital and those that have capital. Hence they facilitate the flow of capital in
the market.
Karvy enjoys SEBI category I for merchant banking. Karvy offers the full spectru
m of merchant banking service beginning from identity the best time for an issue
to final stage of marketing.
6) Insurance:
Karvy is also a dealer of many private life insurance companies. At Ujjain branc
h, it is associated with the dealing of following companies like Tata AIG, Max B
UPA and the like.
7) Mutual fund services:
Karvy provides services to nearly 80% of the asset management services (AMC) acr
oss an extensive network of service centres with asset under service in excess o
f Rs.10, 000 crores.
8) Income tax enabled services:
Karvy provide income tax enabled services. It works as a TIN Facilitation centre
and provides the following services:
• Distribution of PAN Cards (Permanent account number).
• Distribution of TAN Cards ()
ACHIEVEMENTS OF KARVY
• Largest mobilizer of funds as per PRIME DATABASE.
• First ISO-9002 certified registrar in India.
• A category –I Merchant banking.
• A category – I Registrar to public issues.
• Ranked as “The most admired registrar” by MARG.
• Handled the largest ever public issue- IDBI.
• Handled over 500 public issues as registrar.
• Handling the Reliance accounts which accounts for nearly 10 million account hold
ers.
• First depository participant from Andhra Pradesh.
SWOT ANALYSIS
Strength:
• No.1 registrar and transfer agent of companies
• Strong communication network
• Employees are highly empowered.
Weakness:
• High employee turnover.
Opportunities
• Need to explore the rural and semi urban areas.
Threats:
• Increasing number of local players.
INTRODUCTION
FINANCIAL INSTRUMENTS:
In simple terms Financial Instrument is either cash; evidence of an ownership in
an entity or a contractual right to receive or deliver, cash or another financi
al instruments.
Financial Instruments are legal documents that embody monetary value. There are
a number of different types of documents that are properly identified as financi
al instruments. In today s financial marketplace, financial instruments can be
classified generally as equity based, representing ownership of the asset, or de
bt based, representing a loan made by an investor to the owner of the asset. For
eign exchange instruments comprise a third, unique type of instrument
They are broadly categorized under two heads. They are as follow:
INSURANCE
• Date of birth.
• Gender.
• Duration.
• Health conditions.
• Job profile.
LIFE INSURANCE:
All policies are not the same. Some give coverage for your lifetime and others c
over you for a specific number of years.
ABOUT PRODUCT:
TERMS:
Term mean the time period of policy and Maha life gold of Tata AIG for year.
1* 5* 6* 10* 11*
15*
*= YEARS
SUM ASSURED: 1 lack – no limit
AGE CRITERIA: 0 to 60
1 2 3 4
1ST YEAR – 5TH YEAR =
1ST PREMIUM (for 36-39) = 9,200rs
Total premium in 4year = 9,200*4
Total premium in 4 year = 36,800
6 7 8 9 10
6th year - 10th year =
6th year premium = 9,200
Total premium in 5 year = 9,200*6
Total premium in 5 year = 55,200
After 5 year there is a provision of 3% flexible per annum dividend on sum assur
ed.
Calculation:
= 1,00,000*3/100.
= 3,00,000/100.
= 3,000 PER YEA
* = YEAR
TOTAL INTREST IN 5 YEAR= 18,000
10th year - 15th year =
11th* 12th* 13th* 14th* 15th*
* = YEAR
AGE
TOTAL
INVESTMENT
TOTAL
INCOME
35-39 46,000 -
40-45 46,000 18,000
46-50 46,000 55,000
50-80 - 4,50,000
AT THE TIME
OF DEATH 1,00,000
TOTAL
1,38,000
6,30,000
The benefit of this policy that policy holder only have to pay the premium only
for 15 year and he receive benefit for long period of time.
Nomination / Transferability:
• Nomination facility is available.
• Certificates can be transferred from one post office to any other post office.
• Transfer from one person to another person permissible in certain conditions.
Denomination :
• Certificates are available in denominations (face value) of Rs. 100, Rs.500, Rs.
1000, Rs. 5000 & Rs. 10,000.
Interest/maturity value :
• Interest is available on this scheme @ 8%, compounded half-yearly
• Interest accrued on the certificates every year is liable to income tax but deem
ed to have been reinvested.
Income Tax relief :
• Income Tax rebate is available on the amount invested and interest accruing ever
y
year under Section 88 of Income tax Act, as amended from time to time. [under Se
c 80C]
• Income tax relief is also available on the interest earned as per limits fixed v
ied section 80L of Income Tax, as amended from time to time.
BONDS
Meaning of Bonds:
A Bond is a debt security. When you purchase a bond, you are lending money to a
government, municipality, corporation, federal agency or other entity known as “is
suer”.
In return for that money ,the issuer provides you with a bond in which it promis
es to pay a specified rate of interest during the life of the bond and to repay
the face value of the bond (the principal)when it matures or comes due.
Bonds provide the borrower with external funds to finance long-term investments
, or, in the case of government bonds, to finance current expenditure. Certifica
tes of deposit (CDs) or commercial paper are considered to be money market instr
uments and not bonds. Bonds must be repaid at fixed intervals over a period of t
ime.
Features of Bonds:
Nominal, principal or face amount:
The principal is the amount at which issuer pays interest and which, most common
ly, has to be repaid at the end of the term.
Issue price:
Issue price is the price at which investors buy the bonds when they are first is
sued, which will typically be approximately equal to the nominal amount.
Maturity date:
The date on which the issuer has to repay the nominal amount. As long as all pay
ments have been made, the issuer has no more obligations to the bond holders aft
er the maturity date.
• Short term (bills): maturities up to one year.
• Medium term (notes): maturities between one and ten years.
• Long term (bonds): maturities greater than ten years.
coupon :
The interest rate at which the issuer pays to the bond holders. Usually this rat
e is fixed throughout the life of the bond.
Coupon dates:
The dates on which the issuer pays the coupon to the bond holders. In the U.S. a
nd also in the U.K. and Europe, most bonds are semi-annual, which means that the
y pay a coupon every six months.
FIXED DEPOSITS
WHAT IS A FIXED DEPOSIT?
A fixed deposit is meant for those investors who want to deposit a lump sum of m
oney for a fixed period; say for a minimum period of 15 days to five years and a
bove, thereby earning a higher rate of interest in return. Investor gets a lump
sum (principal + interest) at the maturity of the deposit.
Bank fixed deposits are one of the most common savings scheme open to an average
investor. Fixed deposits also give a higher rate of interest than a savings ban
k account. The facilities vary from bank to bank. Some of the facilities offere
d by banks are overdraft (loan) facility on the amount deposited, premature with
drawal before maturity period (which involves a loss of interest) etc. Bank depo
sits are fairly safer because banks are subject to control of the Reserve Bank o
f India.
FEATRURES OF FIXED DEPOSITS:
Bank deposits are fairly safe because banks are subject to control of the Reserv
e Bank of India (RBI) with regard to several policy and operational parameters.
The banks are free to offer varying interests in fixed deposits of different mat
urities. Interest is compounded once a quarter, leading to a somewhat higher eff
ective rate.
Minimum deposits:
The minimum deposit amount varies with each bank. It can range from as low as Rs
. 100 to an unlimited amount with some banks.
How to apply?
One can get a bank FD at any bank, be it nationalised, private, or foreign. You
have to open a FD account with the bank, and make the deposit. However, some ban
ks insist that you maintain a saving account.
Returns:
The rate of interest for Bank Fixed Deposits varies between 4 and 11 per cent, d
epending on the maturity period (duration) of the FD and the amount invested
B.The Sample:
In the project “Financial instruments (traditional approach), I have used “Pr
obability Sampling”. Probability sampling is also known as random sampling.
Sample size: 70 respondents
Sampling period: June 22, 2010 to august 3, 2010.
Sample place: Ujjain city.
As keeping in mind the objective of the study the sample size and sampling techn
ique was selected. Under this sampling technique, it was possible to include var
ious groups of investors within the limited span of time. Secondly it gave me am
ple opportunity to identify the potential customers for the company.
C. The tools:
1. For data collection
The task of data collection begins after a research problem has been defined pro
perly. I have used “Survey method” to collect the data.
I have used “structured questionnaire” for gathering information through contacting
respondent personally. Multiple choice questions are asked in the questionnaire
for data collection.
2. Data analysis
Data analysis is based on the data collected by way of questionnaire.
LIMITATIONS
The sample extent for research is only Ujjain city.
Due to limitation of time and cost constraint a sample size of 70 respondents we
re chosen.
Some of the respondents denied furnishing any information.
Data interpretation:
Majority of respondents (43%) prefer insurance as a better option for investment
. While 29% prefer share market as their investment option.11% go for fixed depo
sits, 9%bonds, 6% national saving certificates and 3%respodents go for Kisan Vik
as Patra.
Data interpretation:
The basic purpose of an investor is saving. About 43% of the respondents agree t
o this fact. While 29% of respondents go for tax benefits.21% respondents for pr
ofit and 7% for risk cover.
Data interpretation:
Nearly about 57% of the respondents invest in share market. While 43% of the res
pondents don’t want to invest in share market.
Data interpretation:
In Ujjain, 36% of the respondents have a Demat account. 64% of the respondents d
on’t have a Demat account.
Data interpretation:
50% of the respondents had their Demat account in Karvy stock broking ltd.29% in
Arihant capital and 14% respondents in indo-Thai securities. While the remainin
g 7% in share khan.
Q.7.Do you know about the annual maintenance charges of your broking firm?
Data interpretation:
It was found that majority of the investors are not aware of the annual maintena
nce charges (64% of respondents).36% of the respondents are aware of their annua
l maintenance charges.
Data interpretation:
79% of the respondents are satisfied by the services rendered by Karvy.21% of th
e respondents are not satisfied by Karvy.
Data interpretation:
29%of the respondents prefer to invest in private sector or company. Remaining 7
1% prefer to invest in public sector or company.
Q.10.What is the most important thing that you keep in mind while investing in s
hare market?
Data interpretation:
57% of the respondents keep in mind the risk associated with the investment. Whi
le 43% respondents keep in mind the returns which they will get after investment
.
Data interpretation:
Only 7% of the respondents have medical claim policy. Majority of the respondent
s i.e. 93% of the respondents don’t have medical claim policy.
Data interpretation:
In Ujjain 86% of the respondents have LIC insurance plans i.e.LIC is the major p
layer in the insurance sector.9% of the respondents have insurance plans of Baja
j Allianz and 6% respondents have policy of other companies.
There is a high potential market for Karvy stock broking ltd. in Ujjain, but thi
s market needs to be explored as investors (15% of respondents) are unaware of K
arvy stock broking ltd.
In Ujjain, investors have inadequate knowledge about financial instruments, so t
he company needs proper marketing of all their services advertising, distributio
n of pamphlet, arranging seminars etc.
Last but not the least, the point which Karvy should keep in mind is to get invo
lved in aggressive marketing. It has optimum resources and these resources need
to be channelized in a more efficient manner.
QUESTIONNAIRE
Name:
Address:
Age:
Contact no.
Q1.Which investment option you prefer?
Ans.Insurance Share market
Fixed deposits Bonds
National saving certificate Kisan Vikas Patra
BIBLIOGRAPHY
• http://www.karvy.com/v2/aboutus.aspx
• http://www.karvycomputershare.com
• http://www.karvy.com/v2/websites/kisl/registry
• http://www.karvy.com/v2/institutional/broking/aspx
• http://www.thefinapolis.com/v2/bondsFDs/bonds_FDs.asp.
• http://www.karvyglobal.com
• http://www.thefinapolis.com/v2/achievement.asp
• http://en.wikipedia.org/wiki/financial_instrument.
• http://www.investopedia.com/terms/f/financialinstrument.asp
• http://en.wikipedia.org/wiki/insurance
• http://www.investinginbonds.com/learnmore.asp?catid=46&id=2